U.S. Grand Jury Subpoenas Allstate, Nationwide over Katrina Claims

May 21, 2007

Allstate Corp. and Nationwide Mutual Insurance Co. have been subpoenaed by a federal grand jury investigating the insurance industry’s handling of Hurricane Katrina claims in Mississippi, the companies said.

Allstate, the nation’s second-largest property and casualty insurer behind State Farm, said it is working with the U.S. attorney’s office to comply with the subpoena.

The company said in a regulatory filing that it “remains confident in its claim settlement practices following Hurricane Katrina and is committed to resolving all claims fairly and appropriately.”

Mike Trevino, a spokesman for the Northbrook, Ill.-based company, said the company had no further comment.

Nationwide spokesman Joe Case said last Friday that the Columbus, Ohio-based insurer received the subpoenas within the past week, but he couldn’t specify what the grand jury is seeking.

“We plan to fully cooperate,” Case said. “We feel strongly that we’ve appropriately adjusted Katrina claims and look forward to answering any questions on these issues.”

It was the second subpoena disclosed by Allstate this month. The company said May 3 that it was being subpoenaed by the U.S. Department of Homeland Security in connection with its probe into Katrina claims. Homeland Security has been investigating insurers that sell policies under the National Flood Insurance Program.

Congress last year ordered an investigation into Katrina damage claims after officials said many insurers shifted the financial burden to the government by declaring that flooding, rather than wind, caused the destruction.

A federal grand jury in Mississippi also has targeted at least two employees of State Farm Fire and Casualty Co. in a criminal investigation of the insurer’s claims handling after Katrina, according to lawyers for the employees. But it was not immediately clear whether the Allstate subpoena is linked to that case.

A spokeswoman for Dunn Lampton, U.S. attorney for southern Mississippi, did not immediately return a telephone message seeking comment.

Allstate shares rose 26 cents to $62.75 in Friday trading before the filing was disclosed.


Associated Press Writer Michael Kunzelman in New Orleans contributed to this report.


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